Parties find middle ground on short-term economic relief

Published 7:00 pm, Wednesday, January 30, 2008

State lawmakers applauded their colleagues across party lines for unveiling economic relief packages this week.

Following proposals by Democratic leadership in the state Senate Tuesday, state Rep. Lawrence Cafero, R-142, minority leader, announced his own plans in Hartford on Wednesday. Both sides want to fund relief packages using roughly $200 million of the state's $263 million budget surplus.

"I thought that Rep. Cafero's

proposal was constructive," Senate President Donald Williams said.

"It adds to the dialogue that we are having across party lines about providing relief to Connecticut families."

Cafero called for up to $500 in tax credits for home heating assistance and the same for out-of-pocket health care costs. Single tax filers making $20,000 to $75,000 per year and joint filers making $50,000 to $150,000 per year would be eligible if the costs amount to at least 4 percent of their projected gross income.

"Is it the be-all and end-all? Does it save the world from disaster? No," Cafero said, "but it's a helping hand to provide for certain people who might need it."

Senate Democrats proposed a $250 increase to existing property tax credits, from $500 to $750 for families that earn up to $190,000. The increase would affect roughly one million taxpayers, according to spokesman Derek Slap.

Cafero praised the idea of tax credits coming from Democrats. "I personally embrace the fact that we're on the same page," he said.

The parties found more common ground by calling for relief of the business-entity tax, which costs $250 for businesses organized as limited liability companies (LLCs) or partnerships (LLPs). Democrats suggested a one-year moratorium on the tax for small businesses.

Cafero said the proposal mirrors what Republicans have offered in previous sessions, although his party was seeking tax relief for all businesses. He said he supported the idea of excluding large companies from the entity tax if lawmakers could find a way to define business size.

Though Williams and Cafero said they were happy to have the issues on the table, they didn't see everything the same way.

Democrats are calling for

a refundable state-earned income tax credit for taxpayers who earn roughly $38,000 or less. The state would provide a sliding scale of credits based on income, in some cases amounting to $940 per family.

Cafero opposed the idea in the short-term because it would require a "dramatic change" to tax structures. But he said roughly $66 million in federal-earned income tax credits have gone unclaimed by the state because people are either unaware of the program, don't understand it or don't know how to fill out the necessary forms.

With $500,000 to $1 million, an outreach program could help people take better advantage of the federal program, Cafero said. "That can be a huge help to a lot of people during a downturn in an economy," he said.

Democrats also want to spend $10 million for Operation Fuel, a nonprofit group that provides heating and air conditioning to Connecticut residents who can't afford it.

There are more proposals on the way.

House Speaker James Amann, D-Milford, will unveil his plan on Friday. Senate minority leader John McKinney, R-Fairfield, is announcing business initiatives Friday and has more proposals in the works.

McKinney was also pleased that both sides were putting ideas on the table.

"My reaction is we are a week away from the start of the session and Democrats are joining with Republicans talking about tax relief and helping the people of the state of Connecticut," he said, "so that's a great place to start a discussion."

Both sides avoided calling their proposals "stimuli" -- the buzzword U.S. Congress is using to describe its own relief package -- though they admitted the plans could jump-start the economy.

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Staff writer Jared Newman may be reached at (203) 354-1045 or jnewman@thehour.com.